Friday, May 15, 2009

Innovate

Listen up folk - investment isn't Oman’s scarcest resource - imagination is. What Oman’s future really depends on is innovation. Indeed, it’s impossible to overstate the importance of innovation. It drives productivity. Helps businesses improve the way products and services are made and delivered. Moreover, it reduces costs by increasing efficiency. In fact, research indicates that innovating companies sustain a higher performance and grow faster than non-innovators. However, it appears that not all Oman-based businesses are taking advantage of these competitive strengths.

Research suggests that one of the measures of innovative performance is the number of businesses that introduce new or improved products, processes or services. In this regard, Oman would appear to be lagging behind. The challenge is to improve on our performance. To be blunt, many of our businesses don’t see innovation as being relevant to them – this is probably due to the fact that they don’t understand how rapidly the world is changing. In fact, globalisation and the major advances taking place in science and technology make innovation essential to most businesses, irrespective of whether you’re operating in Nice, Northampton or Nizwa.

What Don’t You Understand?The fact that many of our businesses don’t see innovation as relevant may also be due to the perception that innovation is just about science and technology. That’s just plain wrong. Innovation’s about anything that enables a business to improve the products and services it offers. Exploiting new technology may be one way of doing this. But it’s equally likely to come from adopting a new business process, using new management techniques or increasing the skills of your workforce. For example, one of the most potent sources of innovation is design. Design can play a catalytic role in the development process, bringing together all aspects of a business from research, through production, sales and marketing. Let’s be clear, innovation has to be for everyone, it’s just as relevant to service industries as it is to the more technology-driven parts of Oman’s economy.

Drucker...Again?As most of you would expect, it was Peter Drucker who put innovation centre stage. A lot has been written about technological innovation, but Drucker had something else in mind - a new orientation to the concept of innovation and learning:

"Every organization - not just businesses - needs one core competence: innovation. And every organization needs a way to record and appraise its innovative performance." Harvard Business Review (Jan-Feb: 1995).

On the media front, it was probably Fortune magazine that called it first in the business press:

"Innovation is the spark that makes good companies great. It's not just invention, but a style of corporate behaviour comfortable with new ideas and risk...Companies that know how to innovate don't necessarily throw money into R&D. Instead, they cultivate a new style of corporate behaviour that's comfortable with new ideas, change, risk and even failure." (March: 1997).

Simply put, and according to Mark Hobbs, GM, Shaleem Petroleum: “innovation is the successful exploitation of new ideas. These ideas may be new, or simply new to your sector, industry or company. It’s a process that creates wealth from knowledge, reflecting the importance of the value of what you know.” I’d expand on Hobbs’ excellent definition to include: Innovation involves the creation of new designs, concepts and ways of doing things and their exploitation and subsequent diffusion through the rest of the economy and society. As such, defining "innovation" with precision is difficult. It can either be wide and embrace all aspects of business or it can be seen as something elitist, practiced by techies in smart offices up at Knowledge Oasis Muscat.

Its Many InterpretationsWhat folk need to understand is that innovation is interpreted and perceived differently, for example:

o To the business community – it means sustained or improved growth delivering higher profits for its owners and investors.

o To Bader Average – it means new and more interesting work, better skills, higher pay and importantly having a good working environment.

o To Joe Consumer – it means higher quality and better value goods, more efficient services (both public and private).

o For Oman – it’s the key to higher productivity, greater prosperity, higher standards of living and ultimately a more vibrant and flourishing domestic economy.

A survey carried out by Accenture and the Talent Foundation (Innovation - A Way of Being) showed that 61 percent of business executives believe that innovation has increased in importance since 2001. Moreover, it features in the top 10 issues list for 96 percent of all companies. Another telling statistic from the Accenture-Talent Foundation survey is that companies only commercialize 20 percent of their good ideas – now, this just isn’t good enough.

National Innovation Review (NIR)Innovation is critical to the future success of business and wealth creation in Oman. This is a hard economic fact. Government, the private sector and education, need, therefore, to work together to create the best possible conditions for innovation in business and industry, to put innovation at the centre of corporate strategies and to covey to young people the excitement and challenges of the advances taking place today in science and technology.

We need to see government, industry, business, finance, tourism, higher education, schools and support providers come together. Such a gathering would play an important role in creating a network and co-ordinated structure that could improve the viability, growth and competitiveness of the Sultanate’s business community.

Partnerships must be encouraged, for example:

o Between businesses, using clusters and networks to pool their strengths and share best practice.

o Between businesses and universities to exploit research and provide the skilled people businesses need.

o Between government and the private sector to create the best possible conditions for innovation and provide the co-ordinated support businesses need to be able to innovate.

We need to promote strategies that focus on innovation in products, people and processes. If this could be accomplished, we’d raise productivity and higher level skills development within the economy. This in turn would lead to greater focus on:

o Business research and development – stimulating business R&D and increasing the pace of R&D commercialisation.

o Demand for higher level skills – in particular employees, who would see business innovation providing new and more interesting work, better skills and higher pay.

o Patents and Licensing – the number of patent registrations and licensing agreements is seen as a critical measure of commercialisation from the knowledge-base to industry.

Perhaps to achieve all of the above, we need to carry out a National Innovation Review – a review that would be clear and specific about where the government should invest public funds to build the infrastructure and provide the support that businesses really require. The review would help us gain an understanding of Oman’s current position and where its ambitions lie in terms of innovation. The review would examine Oman’s existing education, technology, industry, business, finance and tourism infrastructure and also consider how future investment could strengthen our ability to exploit new and emerging areas. The five cornerstones of an NIR would include:

1. Exploiting capabilities - Oman has a growing network of tertiary institutes and research centres at Sultan Qaboos University. We need to bring this innovative thinking into the workplace.

3. Investing in innovation inputs - investing in the training, education and inspiration of Oman’s population.

4. Enhancing innovation culture and spreading best practice.

5. Providing business with an increasing array of 'innovation tools' e.g. finance, skills and market intelligence.

In brief, the principal aim of an NIR would be to improve living standards by promoting innovation and strengthening the economic base of the Sultanate.

Solid BackgroundOman has a strong history of being down-to-earth and pragmatic. A country that sees an opportunity and grasps it. In this regard, it’s vital that we build on our many strengths, like the diversity of the people that live and work here. Over the past few years, much has been achieved on the innovation front, for example, the numerous e-Government projects rolled out by ITA – in areas such as health, education, trade (Ministry of Commerce & Industry’s One-Stop-Shop) and social affairs. PEIE’s work in establishing Knowledge Oasis Muscat, the country’s first Technology Park and base for over 65 hi-tech firms. It’s also home to a business incubator program that’s supported by Trowers & Hamlins, KPMG, Ernst & Young and Intilaaqah. In brief, there are some excellent innovative ideas being taken forward.

On a more practical-level, you’re probably wondering what you can do in your own business environment that’ll contibute to a more innovative Oman? Here’s some actionable advice:

1. Focus on making your customers' lives better. If they can't see that your innovation is going to make their education experiences better, their car hire experiences better, or their supermarket shop better, you may as well throw in the towel.

2. Encourage the dreamers, and have planners who can take the dream and put together a plan and then have executors who can make that plan a reality. Moreover, get these folk to interact and work closely together.

3. Some of the best idea people are most satisfied by seeing their ideas get out there. The really valuable ones are those who have been around the block a few times. Whatever you do, don't lose those people.

4. When you get up tomorrow morning, the first thing you should ask youself is: "Why do I believe what I believe?" Constantly examine your own assumptions.

5. We need to create a tangible new venture process inside organizations. Ideas need a home. They need a place to go. They need people to review them.

6. Do what you love to do and surround yourself with people who also love to do that thing and who are full of talent. If you do that, you’ll build a great business, you can build a big business, or you can build a small business. But be passionate about it and you’ll be innovative as a result.

The Way ForwardWe need business to succeed. It’s innovative businesses that will create our national wealth - wealth for our citizens, our families and our communities. Indeed, in this global economy, Oman-based businesses must wake up to the fact that they will find it increasingly difficult to sell poorly designed, packaged and marketed products and services that just don’t cut it with increasingly-sophisticated and informed customers. Success will depend on their ability to compete by producing products and services that customers want on the basis of higher levels of knowledge and skills, new processes and ways of working. This is the route to better jobs and a more prosperous Oman.

Why is it then that many Omani firms aren’t innovative? If innovation is to succeed, lack of creativity is generally not the issue. It’s all about providing the environment, people support processes and organizational climate that stimulates and supports idea conversion. Only once we have this in place will Omani firms achieve higher innovation quotients.

Side Bars“At KOM, innovation’s our lifeblood. To keep moving forward we need new ideas. One of the challenges that a lot of companies face is creating a culture that sustains innovation. We put aside time for free-thinking, where colleagues sit down together and talk about what we do and how we do it. That process includes everybody from customer care, maintenance, finance, marketing and communications to administration. Let people think; let people dream.” Mohammed Al Maskari, Director General KOM

“You hear managers saying: ‘give me ideas.’ Then they’ll say: ‘But I only want ideas that work.’ If we’re serious about innovation, then we need to be prepared to get things wrong. Since the only way you ever learn is by making mistakes, you have to let that happen in your organization and not punish it.” Raza Ashraf, CEO, Total Alignment.

“I know it sounds off the wall, but tension plays a role in the innovative process. I think for most people, productive days come when our backs are to the wall - that's when creativity really kicks in. If we combine tension with an environment that truly encourages us to take risks, we'll see some great ideas emerge.” Karim Rahmhtulla, CEO, Infocomm Group.

“An ecosystem of innovation has to be created in the organization, and that requires two key players: the idea person, and the internal backer. The internal backers are people who may never have an idea, but they provide the functional excellence that takes an idea, moves it on and up, and creates innovation out of it.” Mark Hobbs, GM, Shaleem Petroleum.